BEIJING, December 23 (TMTPOST) — Chinese Internet giant Tencent will distribute 460 million shares it holds in e-commerce company JD.com to its shareholders as interim dividend, the company said in an announcement on HKEX (Hong Kong Exchanges and Clearing).

Tencent’s holding in JD.com will decrease from 17% to 2.3% after the distribution, which means that Tencent will no longer be JD.com’s biggest shareholder.

The 14.7% stake is worth US16.37 billion.

Eligible Tencent shareholders are entitled to one share of JD.com for every 21 shares they hold in Tencent.

Image Source: Visual China

Tencent’s president Martin Lau has resigned from JD.com’s Board of Directors, according to the announcement. Lau became a member of JD.com’s board and the company’s compensation committee in March 2014.

“I look forward to seeing JD.com and Tencent continue to work on their partnership and create value for society,” Lau said.

Tencent also stated that JD.com will remain to be its important strategic partner. The decision will not impact Tencent’s relationship with JD.com, the company said. There is no plan to further reduce its stake in JD.com so far, according to Tencent.

Tencent first invested in JD.com in March 2014 and later subscribed to shares during JD.com’s IPO. The two companies have established cooperation in a number of areas.

Tencent’s investment strategy remains to be investing in enterprises that are still in their developmental stage with growth potential, the company said. When the invested company has the ability to raise funds on its own, Tencent will then exit from the investment.

JD.com’s shares slumped by 11.2% in early trade on Thursday, registering the biggest daily percentage decline since its debut in June 2020 after the news was reported. Tencent’s shares rose 5.7%.

Tencent might choose to distribute JD.com’s shares as a dividend instead of selling them on the market to avoid a steep fall in JD.com’s share price as well as a high tax bill, Reuters reported, citing a source with knowledge of the matter.